WALTHAM, Mass., Nov. 09, 2020 (GLOBE NEWSWIRE) -- Great Elm Capital Corp.(NASDAQ: GECC), a business development company (BDC), today announced its financial results for the third quarter ended September 30, 2020.

Financial Highlights

• Net investment income (“NII”) for the quarter increased quarter-over-quarter to $1.9 million, as compared to NII of $0.9 million for the quarter ended June 30, 2020, as the Company reported a full period of NII following the strategic repositioning of its portfolio in the prior quarter
• NII per share increased to $0.18, as compared to NII per share of $0.09 for the quarter ended June 30, 2020
• As of September 30, 2020, Great Elm BDC’s asset coverage ratio was approximately 150.9%, up from 144.5% as of June 30, 2020 and up from 141.1% as of March 31, 2020, compared to a minimum asset coverage ratio of 150.0%
• Net assets on September 30, 2020 grew to approximately $60.5 million, as compared to net assets of $53.2 million at June 30, 2020 and $50.8 million at March 31, 2020.
• NAV per share on September 30, 2020 increased to $5.53, from $5.10 per share at June 30, 2020
• For the nine months ended September 30, 2020, we repurchased $5.3 million in aggregate principal of our senior notes at a weighted average price of $19.16 per note

Rights Offering

• Subsequent to quarter end, on October 1, 2020, the Company successfully completed a non-transferable rights offering which entitled holders of rights to purchase one new share of common stock for each right held at a subscription price of $2.95 per share. In total, the Company sold 10,761,950 shares of its common stock for aggregate gross proceeds of approximately $31.7 million.
• As of October 1, 2020, total shares outstanding were 21,703,720 (see selected pro-forma balance sheet information in attached tables)
• NAV per share at September 30, 2020 was $4.18 after giving effect to the rights offering
• Asset coverage ratio was approximately 176.5% after giving effect to the rights offering
• The parent company of our external manager owns more than 25.4% of outstanding shares following the rights offering

Management Commentary
Peter A. Reed, GECC’s Chief Executive Officer, stated, “This was an excellent turnaround quarter, as Great Elm BDC achieved NII growth during the quarter as a result of continued outperformance from specialty finance investments. We believe there are attractive new investment opportunities at compelling values on a risk-adjusted return basis during this period of dislocation in the market. We expect to utilize the proceeds from our recent rights offering to proactively seek investments in the specialty finance market. Since the beginning of our repositioning last quarter we have achieved a number of objectives: strengthening our capital base, which will allow us to grow our investment portfolio, monetizing and redeploying over $80 million of our portfolio, and covering our distribution through a combination of investment income and realized gains.”

Portfolio and Investment Activity
As of September 30, 2020, we held 34 debt investments, totaling approximately $136.1 million and representing 80.3% of the fair market value of our total investments. First lien and/or secured debt investments comprised 98.5% of the fair market value of our debt investments.

As of the same date, we held 8 equity investments, totaling approximately $33.4 million and representing 19.7% of the fair market value of our total investments.

As of September 30, 2020, the weighted average current yield on our debt portfolio was 10.1%. Floating rate instruments comprised approximately 59.4% of the fair market value of debt investments.

During the quarter ended September 30, 2020, we deployed approximately $34.5 million into six investments⁽¹⁾, at a weighted average current yield of 12.3% The weighted average price of the debt deployment activity was 91% of par.

During the quarter ended September 30, 2020, we monetized, in part or in full, 12 investments for approximately $18.2 million⁽²⁾, at a weighted average current yield of 9.6%. The weighted average realized price was 97% of par.

Financial Review
Total investment income for the quarter ended September 30, 2020 was approximately $6.0 million, or $0.56 per share. Total expenses for the quarter ended September 30, 2020 were approximately $4.0 million, or $0.38 per share.

Net realized losses for the quarter ended September 30, 2020 were approximately $0.1 million, or $0.02 per share. Net unrealized appreciation from investments for the quarter ended September 30, 2020 was approximately $6.0 million, or $0.56 per share.

Liquidity and Capital Resources
As of September 30, 2020, our cash balance was approximately $12.6 million, exclusive of holdings of United States Treasury Bills and restricted cash. Total debt outstanding as of September 30, 2020 was $118.7 million, comprised of our 6.50% senior notes due September 2022 (NASDAQ: GECCL), our 6.50% senior notes due June 2024 (NASDAQ: GECCN) and our 6.75% senior notes due January 2025 (NASDAQ: GECCM). During the quarter ended September 30, 2020, we repurchased $5.3 million in aggregate principal of our senior notes at a weighted average price of $21.30 per note. Importantly, as of September 30, 2020, we had no secured credit facility, which allows for greater flexibility in the use of our cash and other assets.

As of September 30, 2020, our asset coverage ratio was approximately 150.9%, up from 144.5% as of June 30, 2020 and 141.1% as of March 31, 2020.

Distributions
Great Elm BDC also announced this morning that its Board set the distribution for the quarter ending March 31, 2021 at $0.10 per quarter.

The distributions will be paid in cash and covered by net investment income. The record and payment dates for the distribution are expected to be set by GECC in December pursuant to authority granted by the Board.

About Great Elm Capital Corp.
Great Elm Capital Corp. is an externally managed, specialty finance company focused on investing in debt instruments of middle market companies. GECC elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. GECC seeks to generate attractive, risk-adjusted returns through both current income and capital appreciation.